News broke on 27/28 May 2013 of a joint longstanding investigation and prosecution by the US Department of Justice and the Costa Rican authorities into Liberty Reserve, the online currency and payment network. This operation resulted in seven arrests in Costa Rica, New York and Spain.
The Americans state that Liberty Reserve is allegedly the biggest money laundering scheme in the world; they further allege that 55 million financial transactions were facilitated by the company, laundering some $6 billion.
It will be argued by prosecutors that Liberty Reserve provided the largest underlying financial infrastructure for cybercriminals all over the world. It apparently also forms part of an earlier prosecution this year which led to the indictment of eight US citizens accused of stealing $45 million from bank machines in twenty-seven countries.
Liberty Reserve only demanded of a client the barest of information: name, address and email address. It did not execute any due diligence or KYC of their clients at all. The clients would rely upon third parties known as ‘exchangers’ where a third party would take the physical cash for a fee and convert it into Liberty Reserve. These exchangers are largely unlicensed/unregulated money transmitting businesses, which are, according to the Americans, based largely in Malaysia, Russia, Vietnam, and Nigeria.
Barclays are fully co-operating with the authorities, as it seems that Liberty Reserve held an account with them in Spain, which shows how easy it is for even the largest of banks to be affected. Forty-five accounts used by Liberty Reserve have been seized by the authorities as well as assets of thirty-five other sites that allegedly fed funds to Liberty Reserve.
The next question is: where are those involved in cybercrime going to move their money? One major competitor to Liberty Reserve is under constant surveillance by the Russian FSB, and international prosecuting authorities are closely watching twelve other similar setups.
If you are the victim of money laundering or a finance or legal professional investigated either for money laundering regulatory breaches or have been charged with such an offence, you will need top money laundering specialist solicitors.
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